'Doing it tough': cost of living fallout hits Hunter Valley hard

Tetsuya's, Lucky Kwong, La Luna, Botswana Butchery, Redbird, Raja, Khanaa, Tequila Daisy ... if they're not already closed, they have a closing date. And a Sydney Morning Herald story this month suggested "industry pundits fear the restaurant closure tally will mount in the coming months".

We know the hospitality industry was rocked by COVID-19 lockdowns and trading restrictions in 2020. Many "pivoted" to new business models to survive in the short-term, but longer-term problems such as finding and retaining staff have lingered.

The current reality of rising costs and outgoings combined with reduced consumer spending have proven too much for some restaurant owners. But is this just a big city problem? Are regional businesses immune?

No, says Hunter Culinary Association chair Gus Maher. Times are tough, and the cost of living issue is exacerbated by the many interest rate rises, and "not knowing whether the next ones are up or down".

"While high profile restaurant closures grab the headlines, the other 99 per cent who continue to push through the tough times are the vast majority," he said.

"It would, though, be fair to say that the vast majority of that other 99 per cent are doing it tough.

"There are a number of reasons across the board - increased costs of staffing, of produce, rentals, and of course the much heralded 'cost of living crisis' that impacts consumer spending - all of this while restaurateurs and hoteliers try to limit too great a price increase to consumers, lest it worsen the issue.

"In the Valley almost all patronage is tourism orientated, and my understanding is that numbers are down. When hardships occur, these luxuries are the first to go."

Newcastle, though, is a different market than the Hunter Valley. Gus founded Newcastle Food Month with his wife Louise in 2020. This year's event was the most successful in its four-year-history.

"While tourism visitation is on a continual growth curve in Newcastle, the majority of meals eaten out in restaurants, cafes and pubs are by locals," Gus explained.

"The same costs for the hospitality industry, and also for diners, still apply, however Novocastrians love to dine out and there are many less expensive options to choose from.

"The upper end of the Newcastle dining scene is small in numbers, and while I believe demand has diminished, there are still enough people in Newcastle to fill most chairs and tables, most of the time.

"However, make no mistake, every hospitality venue is feeling the pinch. Those that have been around long enough, know the cycles, know how to ride them, and know that there will be light at the end of this current tunnel."

Jennie Curran, CEO of Hunter Valley Wine & Tourism Association, says "things have been tough across the board" in the Hunter Valley, not just in the restaurant sector.

"We started to see a downturn in visitation from late last year, driven by impact on consumer demand from cost of living. This, coupled with increased costs of doing business, has led to a very difficult trading environment," she explained.

"We're seeing some pick up, but we don't expect to see significant change in the short-term.

"While there have been reported restaurant closures, there have also been new restaurants opened and a good range of dining options remains really important for visitors.

"The story of Muse celebrating its 15th year is a great example of regional dining done exceptionally well."

She said transaction data showed a decline in tourism in the Hunter Valley in 2023 compared to 2022, particularly from October onwards, which "reflects the broader economic headwinds and impact on consumer sentiment. March and April have been stronger ... but demand into winter is currently lower than expected."

Angela Joy is a Hunter Valley businesswoman who fought hard to save her patisserie, Gigi & Chix Bonbon, and went in to bat for other Pokolbin businesses.

Her final day of trade was last Sunday, May 26.

Angela has chosen to walk a different path and has written an autobiography, Joy, which is due for release on June 13. One of her daughters, 10-year-old Chix, has already written a book called Lulu's Adventure which is now available on Amazon, Kindle and Apple Books.

Angela called me in early March, concerned, saying many Hunter small businesses were operating at a loss. Some popular restaurants had closed, were for sale or "in limbo" ... including her own.

"The economy at the moment is not good for small businesses at all. So, if it doesn't make any sense, it will not make any dollars, and it doesn't make sense to keep a business like this running when people really are having a hard time paying their bills," she said.

"The bottom line is, when small businesses suffer, everyone does. At the moment we are on a sinking Titanic with no life rafts. We need a door to stay afloat, just like Rose!"

A determined Angela also met with Hunter MP Dan Repacholi.

"Most hotels are running at 30 per cent occupancy on average. Business owners are having to work seven days a week because we have had to reduce our staff significantly," she said.

"There is a significant reduction in tourism due to the fact families are now able to travel overseas, accommodation in the Hunter [can be] expensive, dining out is a luxury many can no longer afford. Gone are the days when families would drive to the Hunter for a three or four-day weekend, now they mostly just do day trips."

She also said electricity rates had gone through the roof, rent has increased and "suppliers keep hiking prices every other week".

"Sometimes it's cheaper to buy from Aldi and Coles instead of them as it can work out more cost effective and businesses only buy what they need without having to meet minimum spends."

In March, Angela helped to organise a Hunter Valley Women in Business event in Pokolbin where business owners had the opportunity to speak about their common experiences. Hunter Femme Connect (@hunterfemmeconnect) was formed and will meet again on September 27. All are welcome.